Back at work

Sep 30, 2010

Jonathan Fianu

RBTH

Well I am back. I have been on hiatus for some time now, and what turned out to be a summer break, extended to an autumn re-organization of our company. Due to my increasing workload and personal commitments I will be blogging for rbth on a fortnightly basis. That should give me enough time to distill my thoughts and share my experiences on Russia from an SME perspective.

Interestingly, I am not the only one who has been busy during this period. I have kept abreast with Russian affairs while in England and a lot has gone on. From the wildfires and harvest concerns, to Sochi and technology, a lot has happened in the last couple of months. To me, this demonstrates the pace of change in the country. Internally we were assessing the strengths of our individual projects in Russia, and despite the difficulties that a foreign company faces when working in a new emerging market, I am more and more convinced that we are doing the right thing. I have consulted with various colleagues at different levels in a variety of sectors, and everyone always expresses initial doubt about the region until I start sharing my experiences and the opportunities I have witnessed. That said there are some major lessons that I took the time to reflect on during my break. First though, I want to comment on a story I saw on RT.com about UK companies. I loved reading this piece. Although the slant was questionable, it had a strong underlying message - “Who Dares Wins.” The old SAS motto has never been more apt (from a business perspective of course!).

Here is a UK company doing what I even considered was the unthinkable in setting up a small refinery in Russia, where the problems are so obvious it’s not even worth mentioning (read the article to get an idea). But the fact that they were moving forward is great and with the right approach they can succeed (although the author thinks otherwise).

Entering into Russia at an SME level is absolutely the right move for companies with the appropriate risk appetite. Speaking to colleagues, they tried to persuade me that there were enough opportunities in the UK, and proceeded to outline that the opportunities can be found if you choose the right niche. Well in Russia, you don’t need to look for a niche sector as the opportunities are laid bare. Outside of the main cities, you can make a shop where there was no shop before, or offer a service or product, so prevalent in the UK that you wouldn’t think to offer it, except to your astonishment it does not exist for as far as your eye can see. Russia is going through some major changes, and with Sochi, Russia’s investment concerns, and international status, the change is being pushed through at an amazing pace. You only have to look at what’s happening around Skolkovo (the Russian version of Silicon Valley) and recent business forums to see that the government is keen on change and progress. Of course there is a way to go, but the changes are beginning.

So this brings me back to some of the lessons I was reflecting on during my break. Well for starters, as an SME entering Russia, it is paramount that the right partner relationship is created. We went in thinking that sharing financial responsibility and input was part of the recipe of a strong partnership, after all if both parties are committed on a financial level then you are more likely to move forward in the same direction (generally to make money!). However, we found this was not the case. Outside of the main centers, the best approach is to fund your product or service yourself. If you go in with the mentality of “need not want not,” you will find that you are in a stronger position to adapt to changes, and believe me you will need to adapt, even in the smallest of projects, and with the smallest amounts of money. That is not to say that partnerships are not crucial, they are, and you will need the right connections in order to make your stay in Russia more pleasant, but if you are in full control financially, then you can change or add partners at will. Next is image, which is awfully important, and is the only thing I really detest about working in Russia, but something that I have to buck up and join nonetheless. Things will go a lot more smoothly if you if you follow this code, as it’s here to stay.

Another thing I learned was that fostering the partner relationship is crucial for business. I can only speak for the smaller towns and cities I have worked in, but conducting business there is akin to starting a friendship. If you just meet someone you can’t call them your friend, and therefore won’t have the qualities that friends have between each other—trust, openness, being relaxed, sharing information. These are all qualities that exist in a healthy friendship and that don’t exist when you first meet someone. Now friendship takes time, and that is why a deal or a project can’t just be started on the premise that it is a good idea, and that will make both parties money. I have worked on this premise many times in the UK, but it just won’t work in Russia. In my experience, successfully partnerships in Russia are based on the qualities of friendship emerging over time. This will involve dinners, meetings and family time on both sides, such as a weekend away snowboarding with both families. Now this will involve a significant outlay, so the projects need to be chosen well. You will be spending the same money on the above regardless of the project, so only ideas that will generate a serious return should be considered.

You are probably thinking: “When does this stop?” Well funnily enough, it stops when your partner trusts you, and they will trust you when they ask something from you. If they feel comfortable enough to ask you for a favor, you will know you have cultivated the trust in the relationship to a satisfactory level. Up until this point, only minor steps should be made in establishing your business endeavor. This then matches with what I was saying before regarding the financial arrangement. If as a foreign company you are holding all the chips financially you can work at your own pace. It also means you can bring in your own management—yes, this should be local, but it will be at your discretion.

Some of these lessons took a long while to learn, and believe me, as easy as it sounds it is not so easy to follow. It was these lessons (and others) that I reflected on during the last few months, and we have since narrowed down the list of our active projects in the region (new website is coming soon). We are in Russia to stay because the opportunities are there for the taking, and after two years of investment it would be foolish to leave, but as his Royal Highness stated in the RT article, it is only when you are on the ground that you can see what Russia has to offer with your own eyes.

So I am restarting my blog with pretty much the same rhetoric as before – Russia is changing, and if you miss this, you will only be kicking yourself later, but that said, consult heavily before you enter.